The Middle East continues to be a key market for the UK supply chain, which is not surprising given the region’s significant share of the world’s oil and gas reserves and the fact that plenty of investment is taking place.
EIC DataStream shows that in the region’s upstream sector alone, there are 226 projects with an estimated value of over US$ 333 billion. 146 of these are active and 80 are proposed future projects with values of US$ 264 billion and US$ 68 billion respectively.
Opportunities to do business are good for supply chain companies offering innovative technology and engineering solutions capable of helping operators to shorten the discovery-to-production lifecycle, optimise production, and deliver greater economic value from the region’s oil & gas assets.
Hotspots of activity in the upstream sector can be found in Iran, Iraq and the United Arab Emirates which together represent around two thirds of the total investment potential for the region.
Projects in Iran amount to over US$ 100 billion with the largest 10 of the total 64 projects being dominated by gas developments such as the Kish Gas Field, Phase 12 of the South Pars project and the Lavan Gas Field. These three active projects alone account for US$ 31 billion.
However, doing business in Iran in the current political climate is challenging and companies are advised to seek advice from their relevant governmental authorities before committing to any contract. In July a European Council Declaration agreed sanctions against Iran that prohibits the sale, supply or transfer to Iran of key equipment and technology, as well as related technical and financial assistance, which could be used in key sectors in the oil and natural gas industries. The regulations could affect pre-existing contracts and licenses as well as any new ones.
Against this backdrop, the EIC recently ran a seminar in London with a number of experts who explained how the sanctions will affect business dealings with Iranian companies and continues to offer guidance to its members.
In Iraq, there are currently 36 upstream projects with a total value of US$ 77 billion with key projects including the US$ 15 billion South Rumaila Oil Field, the US$ 10 billion Common Seawater Supply Water Injection project and the US$ 10 billion Zubair Oil Field. One major IOC advised me that Iraq could be bigger than Saudi for oil reserves.
There are 26 upstream projects in the UAE with a total value of US$ 46 billion. The largest projects are the US$10 billion Abu Dhabi Onshore and Offshore Sour Gas Development Programme, Shah Field; the future Gasco Masterplan (GMP) Phases 1&2 with a potential investment of US$ 6 billion and the US$ 6 billion Zakum Facilities Build-up project.
Some of the most significant opportunities in the region are associated with the North Gas Field in Qatar with numerous projects estimated to be worth in aggregate US$ 20 billion. This is the largest non-associated gas field in the world, accounting for 14.2% of global reserves. It sits in the same geological structure as Iran’s South Pars Field, which has still to be fully developed.
The North Field’s projects revolve around Qatar now being the world’s leading exporter of LNG to global markets with a 77 million tpa target confirmed to have been reached in December 2010. However, in 2005 the Qatar Government placed a moratorium suspending further development of the field pending a re-assessment of the reservoir, which is not expected to be lifted before 2013.
Almost a third of all projects, representing just over 30% of the total value in the region, incorporate offshore developments. In addition to projects in the North Gas Field and the South Pars Development, key offshore projects include the Manifa Oil Field re-development project off the coast of Saudi Arabia valued at over US$ 9 billion which is predicted to produce 900,000 bpd of Arabian heavy crude, 120 million ft3/d of sour gas and 50,000 bpd of condensate.
As part of a continued drive to support UK companies in developing their businesses in the Middle East, every year the EIC organises a number of specialist networking events and trade missions to the region.
A key event this year is EIConnect Energy taking place on 29th March at the InterContinental Hotel in Abu Dhabi. The event will see leading national and international oil companies, operators and contractors presenting their project and procurement plans for the region. These include purchasers from BP, Mott MacDonald, Shell, Siemens, WorleyParsons, Jacobs, Punj Lloyd, Masdar and Shaw. Sponsors for the event include DHL, Shaw, Siemens and WEG.